Mini Meds: The Insurance Industry Swindle

Is a few thousand dollars worth of health care coverage really insurance? Senator Jay Rockefeller (D-WV) raised this question at a December 1 hearing appropriately entitled Are Mini-Med Policies Really Health Insurance? As chair of the Senate Commerce, Science and Transportation Committee, he is questioning the value of these mini-medical plans. The Senator should be praised for his continued work on health reform, and especially so for focusing a spotlight on limited benefit plans.

You may recall the dust-up in September when McDonalds Corporation threatened to drop coverage for their employees if they were required to comply with the Affordable Care Act’s (ACA) new consumer protections. These protections included the elimination of lifetime caps on benefits, an increase in allowable annual caps and a requirement that insurers use 80-85 percent of premium dollars to pay for the medical care, called a medical loss ratio.

The ACA included this provision to ensure insurance companies were not spending excessively on overhead or profits, and to ensure basic consumer protections in health insurance. McDonalds and other companies offering mini-medical plans said these standards were too tough to meet.

Mini-medical plan carriers claim their affordable coverage, while limited, is better than nothing. Perhaps, but it is not a certainty.

According to a survey of employers done by the consulting firm Mercer, the median annual cap for mini medical plan benefits is $7,000. This amount could easily be exceeded after a short hospital visit. However, misleading plan design and language actually makes these stated limited benefits even more diminished.

For example, mini-meds typically cap hospital, physician, diagnostic, and preventive care benefits. They also limit payments toward hospitalization by establishing a per day maximum rate. The effect of limiting reimbursement to $250 for each day’s stay in a hospital allows mini-med plans to further limit their financial exposure, but means that consumers are left with the bill.

Such trickery lets mini-med plans keep more of the premium dollar while those covered by such plans incur medical debt if they get sick. Many of the estimated 1.4 million Americans with mini-meds were double-crossed. Through The Access Project’s work on medical debt, we have encountered many people who were deceived into believing that their plans offered a modest cushion of protection. Those who got sick learned, after the fact, that they had even less coverage than outlined in bold letters on their policies.

The industry has all but admitted that mini-med plans have not been straightforward about coverage limitations. Just this week, an industry trade group representative noted that federal regulators will require mini-medical plans, next year, to inform enrollees about plan limits. He went on to say the industry supports this increased transparency.

An Act of Congress was literally required for them to take this step. A clear warning that these faux insurance plans offer little or no protection should be a requirement. However, the best protection for Americans is full and prompt implementation of the ACA. Once this is a reality, real insurance protections will be extended to all Americans.